Requirement: Business Loan

A long and well firm of Quantity Surveyors based in Renfrewshire specialising in construction dispute and contract consultancy.

The 3 directors completed a Management Buy Out in November 2018 which saw the original owner exist the business.

Projects undertaken have been throughout the UK, and as far as Spain Portugal France Germany Croatia and more recently Malta.

The contract in Malta will cover a period of 2-years with options to extend for a further 3-years.

Rather than putting it’s staff up in Hotels whilst working on the contract the directors wanted to purchase a company house – as part of the contract all accommodation expenses are to be covered by the client, therefore the company will be charging its client the hotel rate which they would have charged the client for a nights/weeks accommodation in a Hotel.

The clients were happy to provide a 33% deposit towards the proposed purchase.

Business had a strong balance sheet and was profitable with serviceability easily being proven from the last 3-years accounts.

The business had significant cash balances and could have used these in-order to purchase a property without the need to borrow. However, the directors did not wish to tie all their surplus cash on the purchase – hence the need for a Business Loan.

Whilst the business was financially strong, it had little in the way of tangible assets it could use as security for the proposed facility.

Therefore, the client was looking for an unsecured facility repayable over a period of between 5-10 years.

Given the strength of the business and its financial performance a repayment term of 5-years could easily be met with the estimated serviceability being met by 10x against the Adjusted EBITDA (Earnings Before Interest Tax and Depreciation).

Approaches were made to the traditional Tier 1 banks, but neither wanted to help on an unsecured basis (other than a Debenture and unsupported director guarantee).

We then made approach to Funding Circle and ESME.

A formal offer was received at an Interest rate of 0.42% per month equating to an annual rate of 5.04%.

For strong credit worthy business going to alternative finance providers does not mean the client will be charged a higher interest rate as the above proves.

The Above Case earned a Gross Fee Income of £6,000.

Please Note this case was completed during the current COVID-19 crisis showing lending is still being achieved.